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We need a new approach to support pension outcomes

by wrich
gawdo
  • The Work and Pensions Select Committee has called on government to do more to boost access to guidance for people taking a retirement income for the first time.
  • It says government should consider two trials. One where Pension Wise appointments are automatically offered to people who want to take an income from their pension, and a second which would look at offering appointments to people aged 50 before they access their pensions.
  • The Committee says the government should aim to boost Pension Wise usage to 60%. It’s currently around 14%.
  • The report also looks at whether a more enhanced guidance service can be offered to support people more. While the report talks about this being offered as part of Pension Wise providers could also help customers by developing these services.

Work and Pensions Select Committee has issued a report calling on government to take a more active role in helping people make good decisions about their retirement Lack of guidance for pension savers risks freedoms ‘failure’, MPs warn – Committees – UK Parliament

Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown:

“Pension freedoms are almost seven years old and while people have taken to the new flexibilities with gusto, in many cases they are doing so without the support of guidance or advice. There are many tools that people can access to help them find out more about their options, but they remain under-used and scattered. Only around 14% of people who could be making use of Pension Wise are actually doing so, while use of the pensions advice allowance remains low. People don’t know these services exist, never mind how to access them – we need a new approach.

The Committee’s plan to make Pension Wise appointments automatic goes a step beyond current plans for providers and trustees to offer to book an appointment for people looking to take a retirement income. While it would certainly boost use and awareness of the service there is also the chance that people still decide not to take up their appointment, which could cause problems for the service.

Another option put forward was the potential for Pension Wise to be able to offer an enhanced guidance service where it could go above and beyond going through the pros and cons of products and signposting to resources to something a bit more personalised to the individual’s needs. This is something that would be welcomed more widely – providers have been prevented from offering such services for fear of being seen to be straying into advice. Being able to develop such a service could potentially really help people get to grips with their retirement options more and ensure they make good decisions.”

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